Cross-Selling: A Devastating Double Bind (2003)

It's the casual comments that are often most powerful.

A few years ago, I was interviewing John Liftin, Senior Vice President and General Counsel of the Prudential Insurance Company of America, for a book I wrote, Inside/Outside: How Businesses Buy Legal Services (American Lawyer Media, 2001). Among the various law firm marketing and business development initiatives we discussed, I asked him about cross-selling.

"How do you feel about it when a partner offers to introduce you to another partner at the firm, with the idea that you will need or want to buy that other lawyer's services?" I asked him. In other words, "how do you feel about cross-selling?"

Liftin's response was exquisitely casual. "Oh I don't mind," he said, "if they don't mind burning a little of their credibility."

I quoted that comment in my book, for a few reasons. First, it seemed to be a challenge of sorts to an altogether sanctified marketing canon cow. Isn't cross-selling a manifest activity of institutional marketing at its most sophisticated? Doesn't cross-selling show that a firm's marketing engine is finally revved on all cylinders?

Second, it underscored an essential theme I was trying to develop, that all marketing must be based on a value proposition for the client. No matter who eventually buys from whom, the client must benefit from the marketing activity if it is to finally be worth the time for seller and buyer alike.

Could it be that cross-selling is actually all about the seller?

INTEGRITY-BASED SELL

Cross-selling is indeed virtual gospel in the professional services or at least it was until pundits like David Maister began questioning the proposition. Talk to a variety of marketing cons ultants who've been around the law firm block -- wise heads like Joel Rose, of Joel A. Rose & Associates, or Bob Denney, of Robert A. Denney & Associates -- and, in one form or another, they all ask the same fundamental question: Does cross-selling deliver value to the client.

Bruce W. Marcus, who publishes The Marcus Letter, takes it a little further. "Cross-selling is the greatest fraud ever perpetrated on the professional services," he intones.

Fraud? Why fraud? Because the gospel of cross-selling in essence says, "Look, it's really simple. New business tends to come from existing business. If your clients are happy with you, you've got every opportunity to present your partners to them for the greater good of your law firm. And, since you lawyers are so antediluvian when it comes to marketing, we're going to spend thousands of dollars to train you how to cross-sell (along with teaching you a few other marketing tricks as well)."

If "fraud" is too strong a term, "misrepresentation" will suffice.

What, after all, was John Liftin suggesting? I believe he was suggesting that, often, cross selling is simply not sufficiently disinterested. Lawyers make more money by cross-selling. There's nothing wrong with that, of course, provided they do actually believe that what they're cross-selling will solve their client's problem as well as or better than lawyers elsewhere.

But too many in-house counsel are wise enough to know just how intensely partners habitually pressure each other to cross-sell. As such, they have to be at least a little skeptical when they hear the pitch. Thus do the sellers of professional services inevitably "burn a little of their credibility" when they cross-sell.

In the last analysis, cross-selling is not a professionally impossible goal nor must it necessarily be vitiated by pure self-interest on the part of the seller. It is, however, a highly complex process that requires law firms, or any profe ssional service firms, to take careful stock of themselves, what they have to sell, and what resources they will need to develop to convince the John Liftins of the world that it is indeed worthwhile to have lunch with your partner.

There are three basic criteria to justify any cross-sell:

• Would you hire the guy you're pitching?

• If so, can the client still do better elsewhere?

• Do you know enough about the client's situation to presume that the cross-sell will be valuable to the client?

That third criterion speaks volumes. If marketing and sales are all about listening, about uncovering client pain, then cross-selling validates itself only to the extent that it happens, rather spontaneously, in the context of a discussion in which one of your partners or other practice groups emerges as a viable solution.

Spontaneity is the key. You can't cross-sell legal services like a clothier showing a rack of neckties and asking the customer to pick a few he likes. ("Here you go, Charlie...we got IP, we got real estate, we got corporate finance...Pick a practice area, any practice area...") In other words, cross-selling cannot be part of an a priori sales agenda. It must naturally emerge from the client dialogue as a concrete and logical solution to a specific client problem.

Integrity is how you cross-sell. But that's only half the battle. There's also the what -- and here the devil really is in the proverbial details.

THE INTERNAL TRAP

Referrals are a sacred part of client duty. If you can't cross-sell the best, don't cross-sell at all!

Sound a little idealistic? In fact, there are enough partners at enough law firms adhering faithfully to this principle that we need to refocus the question altogether. In actual practice, many partners don't cross-sell -- not necessarily b ecause they're lazy or selfish, or because they're incompetent marketers -- but because they're too client-focused to willingly sell their clients a bill of goods (no matter how much internal pressure they're under to do so).

The double bind, as Joel Rose describes it, is simply that you have to have something to cross-sell before you can cross-sell. If you don't -- if your partners in another practice group just aren't capable enough for your clients -- then what does the lawyer do? How can he or she explain that internally without causing a political ruckus?

Silence won't help. After all, the client is still looking for somebody to handle that land use job or that IP job or whatever. If the work winds up at another firm, the responsible partner will be blamed.

Can the responsible partner refer the client to another firm? Maybe. As Bob Denney points out, a strategic partnership with another firm may be just what's needed to fill the gaps in client service. It certainly addresses Liftin's "credibility" issue since we're no longer talking about self-interested cross-sells.

But it's risky in any event. If the boundaries aren't clearly drawn, the other firm can, now or in the future, start poaching your share of the client pie.

Would that it were simply a marketing problem! It goes much deeper, however, beyond the instincts and abilities of professional marketers and salespersons. It goes to the very nature of a professional services partnership, especially as, amid inexorable growth, lawyers barely even know their partners, much less invest enough faith in them to cross-sell to their treasured clients.

HIGH TRIBUNAL

The solution lies with the managing partner. One form of the solution is reactive and the other is proactive.

The reactive solution begins with the responsible partner. Caug ht in the double bind, he or she must go the managing partner and say, "I just can't foist our land use lawyers on the XYZ Corporation...they're not up to the job...and I may have to advise XYZ to hire somebody over at Jones & Smith. I got a problem that I just can't solve. You deal with it, top partner!"

The proactive solution begins with the managing partner. He or she studies the firm's financial data and sees all that land use work winding up elsewhere. He or she thus realizes that there's been a failure to cross-sell or, more ominously, a refusal to try.

In either event, reactive or proactive, the managing partner must take the same daunting steps.

1. Find out if the land use area is weak. If so, the managing partner has to be the one to take the political heat and assume the internal communication. But how do you go about telling those lawyers that their own partners perceive them so dimly?

Well, you needn't! As Denney advises, you can instead commission a market survey conducted by a disinterested party so that the marketplace, not you, renders the unpleasant determination. "We really respect you guys, but we just can't cross-sell you...I mean, look how people in the client industry perceive you! We value your work, but our hands are tied."

It's a white and kindly lie to preserve internal comity and keep you, the managing partner, in a sympathetic and supportive role.

2. Use the failure to cross-sell, and the reasons for that failure, as a spur to aggressively tap the lateral market. Come up with a few new hires that your partners will be able to enthusiastically recommend to their clients.

3. You might find out that that land use group is, in fact, as qualified as any in town. Here, the managing partner may thus confront a whole different aspect of the problem, which is that the partners are not particularly motivated to cross-sell anyone, or market anything, except themselves, even assuming the basi c criteria of integrity-based cross-selling -- i.e., truly superior resources to meet well-defined client needs -- are there.

The worm in this apple is usually compensation. Partners may feel they have no incentive to cross-sell (especially if it means risking even a scintilla of their own credibility with clients). If so, the essential task at hand is to then trail-blaze a new compensation system that awards cross-selling in particular and firm-wide marketing in general.

In that sense, fixing the problems of cross-selling, and of marketing in general, is a cultural palliative that can discourage hoarding and strengthen the firm-wide ties that bind.

The bottom line, though, is that it's not necessarily a matter of training lawyers or convincing them that cross-selling is the right thing to do. First, the managing partner must ensure that it actually is the right thing to do -- by staffing lawyers who are worth cross-selling on behalf of clients with reason to care.

Such fundamental and formidable challenges make you wonder how firms with weak managing partners are able to survive at all.

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Larry Smith is Director of Strategy at Levick Strategic Communications, which has handled media relations for over 150 law firms worldwide. He can be reached at Lsmith@Levick.com.